Chipmaker Marvell to buy smaller rival Cavium for $6 bln

Marvell Technology Group is buying smaller rival Cavium in a $6 billion deal to expand its wireless connectivity business in a fast consolidating semiconductor industry. Fred Katayama reports.

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Chipmaker Marvell is shelling out $6 billion for smaller rival Cavium.
The goal - to grow Marvell's wireless connectivity business.
San Jose, California-based Cavium builds network equipment. Hamilton, Bermuda-based Marvell makes chips for storage devices.
Together they might do just fine, says GBH Insights' Daniel Ives:
(SOUNDBITE) DANIEL IVES, CHIEF STRATEGY OFFICER & HEAD OF TECHNOLOGY RESEARCH, GBH INSIGHTS (ENGLISH) SAYING:
"I think this was the right move for Marvell. I mean, they're really changing their strategy. They've had a lot of activism in the name. They're diversifying, and they're going to get stronger. I think Cavium is the right acquisition at the right time, especially that you start to see more consolidation, and the choice here is either get bigger or you probably get acquired."
The $6 billion price tag is an 11-percent premium on Cavium's Friday closing price. The stock shot up on Monday.
The Marvell - Cavium deal is the latest in the fast-consolidating chip industry.
Last week, mobile chipmaker Qualcomm rejected rival Broadcom's $103-billion takeover bid. It said the offer was too low and would face regulatory hurdles.